Credit appraisal and risk management of Uttara Bank Limited

Abstract

This report is basis on the entire process of credit approval and the credit risk assessment system of Uttara Bank Limited and identifying the positive aspects as well as the shortcomings of that credit scheme. After completing of BBA program of BRAC Business School, I have completed my internship in Uttara Bank Limited (Sadarghat Branch), one of the largest and reputed private commercial bank in Bangladesh and went under a rotation program in different department of Uttara Bank Limited (UBL). I worked with some officers and some departments sincerely. But I mainly gave emphasis on the bank’s credit appraisal and recovery policy. The objective was to analyze the criteria of UBL’s such as loan distribution sector, interest rate of loan, the bank’s capability to recover load during stipulated time and the management efficiency regarding classified loan. The primary activities carried out by the credit department of UBL include evaluation of loan application, preparing necessary documents for the loan approval, monitoring the loan after disbursement and ensuring its repayment and finally initiate classification in case of non-recovery. Credit proposals are appraised critically by Uttara Bank Limited. The customer at the branch of the bank place credit proposals. When customers come with a credit proposal, the credit department of the Branch makes an open discussion with customer on different issues of the proposal to judge the worthiness of the proposal and the customer. If the proposal seems to be worthwhile in all respects then the proposal is placed before the credit committee of the bank. After threadbare discussion, if the committee agrees in principle the proposal is sanctioned as per the delegated business power of the branch. The execution of documents in proper from and according to the requirements of law is known as documentation. The documentation does establish a legal relationship between the lending bank and borrower. The terms and condition of loans and advances, the securities charged and the repayment scheduled is recovered in writing proper documentation for safeguard the future interest of the bank.